Top investor warns Canada, U.S. infrastructure plans to take time

Matt Scuffham

3 Min Read

TORONTO (Reuters) - Ontario Teachers’ Pension Plan, one of the world’s biggest infrastructure investors, warned it could take more than 10 years for infrastructure investment plans by Canada and the United States to come to fruition.

Canada hopes its planned ‘infrastructure bank’ will facilitate billions of dollars of financing from private investors for critical projects in areas such as public transit and green infrastructure. Meanwhile, U.S. President Donald Trump has said he will launch a $1 trillion infrastructure program funded from private sources.

“To really make a coherent, long-term, visionary infrastructure plan for Canada or the U.S. you’ve got to think in terms of a decade or a decade and a half to really get momentum in these projects,” Mock told reporters after the OTPP published its annual results on Wednesday.

Canada’s Liberal government has come under pressure to move more quickly in rolling out a planned C$180 billion ($135 billion) infrastructure program.

Chief Investment Officer Bjarne Graven Larsen said he believed Canada was ahead of the United States in progressing with its infrastructure plan, partly because of the creation of the infrastructure bank.

Ontario Teachers’ pioneered a move by Canadian pension funds in the 1990s to invest directly in private companies, infrastructure and real estate internationally as an alternative to Canadian equities and government bonds.

The fund’s infrastructure portfolio includes investments in Britain’s high speed railway connecting London and the Channel Tunnel and in one of the largest desalination plants in the world in Sydney, Australia.

The OTPP, which administers pensions for 316,000 working and retired teachers in Canada’s most populous province, said its rate of return dropped to 4.2 percent last year from 13 percent in 2015. It cited unfavorable currency movements as a factor behind the weaker performance.

The results still exceeded a benchmark target of 3.5 percent for the fund, Canada’s third-biggest public pension plan.

The OTPP said its net assets grew to C$175.6 billion at the end of 2016 from C$171.4 billion a year earlier.

The fund, which has investments in more than 50 countries, said currency movements had a negative impact of 280 basis points on its rate of return in 2016, compared with an 830-basis-point positive effect in 2015.

Ontario Teachers’ said it was 105 percent funded as of Jan. 1, meaning it had a surplus of assets with which to meet its future pension obligations.